Tag Archives: Yellen comments

Technical Read: Gold managed an uptick close today, but that masked two intra-day rallies that just couldn’t take hold. I am attributing this to some lightening on the shorts ahead of a news event. Maybe some stop hunting too. Momentum readings are still negative and the down trend remains in place. Lower highs and lower lows, the classic downtrend definition.

Backdrop:

The room is quiet, as the rows of reporters suck in their breath awaiting Yellen’s first words from the podium. The Federal reserve Chairwoman brings a fist down and says, “Blankety-Blank, this is it, no more QE and we are raising rates!” What is the chance of this happening? Not very likely. Europe is showing signs of contraction and there is considerable fear that a whiff of deflation is a step away. Not to mention the political fallout from the Democrats possibly facing re-election and a market correction. Expect the status quo and the wilting of gold prices.

US Government Bond vs gold comments (status still available). US Government bonds made a show of a rally but it failed by end of day. The bond trend is pointing to lower prices. So the pecking order for now: bonds go down, interest rates go up, the US dollar goes up, AND gold goes down.

Technical Read: Spot gold dropped through the recent upward trading channel. This combined with the penetration of the July 31st pivot point is bearish action for the yellow metal. The question is will the breakdown continue?

Backdrop:

The US Dollar index broke out to the upside. This is bearish for gold.

Leading geo-political events (Gaza, Ukraine and ISIS expansion) are still active but the unrest is largely factored in the market. At this point, some new accelerant needs to be added to bounce gold higher. Bearish for gold.

This week’s Janet Yellen comments from the annual Federal Reserve conference at Jackson Hole were highly anticipated by market participants trying to gauge the future path interest rates. However, the remarks seemed designed to give the Central Bank plenty of latitude in keeping the asset purchase program in place. Interest rates drifted lower in the wake of the event. Bearish for gold.